Sun Pharmaceutical Industries is the fifth largest specialty generic pharmaceutical company in the world providing high-quality, affordable medicines trusted by healthcare professionals and patients in over 150 countries.
It is also the largest Indian pharma company by revenues and market capitalization.
In India, the Company enjoys leadership across 13 different classes of doctors with 32 brands featuring among top 300 pharmaceutical brands It is the largest player in the India formulations market.
Sun Pharma has one of the strongest brand franchises in the chronic portfolio in India market. The key focus areas include CNS, dermatology, cardiology, oncology and ophthalmics, among others.
Sun Pharma entered the US generics market through its acquisition of Caraco and then expanded the product basket with the acquisition of Taro Pharma & URL Pharma.
Sun Pharma has grown inorganically mainly by acquiring stressed assets at cheap valuations. It has one of the widest reach to the medical fraternity in India with a 9,200+ strong sales force reaching around 600,000 doctors.
Sun Pharma acquired Ranbaxy through an all-equity transaction in 2015. The Ranbaxy acquisition has given a strong emerging market platform to Sun. Sun has in-licensed a Biologic product from Merck intended to be used in the treatment of the moderate to severe plaque psoriasis.
In this article
- Sun Pharma share price
- Key Acquisitions: For business growth
- Growth Strategy of Sun Pharma
- Diversified Revenue base of Sun Pharma
- US Business at a glance
- Key Milestone in US Business
- India Business at a glance
- Other Pharma Companies in India
- Key Financial Highlights of Sun Pharma
- Key Concerns for Sun Pharma
- Mutual funds holding Sun Pharma Shares
Sun Pharma share price: ₹423.65 (24th Jan 2019)
The 1 year data for historical share price of Sun Pharma:
Key Acquisitions: For business growth
|1997||Acquired Caraco||For entering the US generics market|
|2005||Assets of Able Labs Formulation plant in Bryan||Access to formulations plant (NJ, US)|
|2008||Acquired Chattem Chemicals, Inc||Access to controlled substance facility with DEA registration|
|2010||Acquired Taro Pharmaceutical Industries Limited||Enhanced presence in the US generics market, especially the dermatology segment|
|2012||Acquired DUSA Pharma, Inc||Access to branded derma product|
|2013||Acquired URL’s generics business||Addition to the US generics portfolio|
|2014||Acquired Pharmalucence||Sterile injectable capacity in the US, supported by strong R&D capabilities|
|2014||In-licensing agreement with Merck for ILUMYA a biologic for psoriasis||Strengthening the specialty product pipeline|
|2015||Sun Pharma – Ranbaxy Merger||Fifth-largest Global Specialty Generics Pharma Company and No.1 Pharma Company in India with strong positioning in emerging markets|
|2015||Distribution agreement with AstraZeneca||Distribution services agreement in India for brand ‘Axcer’® (brand of ticagrelor, used for the treatment of acute coronary syndrome)|
|2015||Acquisition of GSK’s Opiates Business||Vertical integration for controlled substances business|
|2015||Acquisition of InSite Vision||Strengthens branded ophthalmic portfolio in the US|
|2016||Distribution agreement with AstraZeneca||Distribution services agreement in India for brand ‘Oxra’ and ‘Oxramet’® (brands of dipagliflozin, used for diabetes treatment)|
|2016||Acquired 14 brands from Novartis||Entry into Japan|
|2016||Licensing agreement with Almirall for ILUMYA for Psoriasis||Strengthening the distribution of ILUMYATM in Europe|
|2016||Acquired Biosintez||Access to local manufacturing capability to enhance presence in the Russian market|
|2016||Acquired global rights for OTX-101 and Odomzo||Enhances specialty pipeline|
Growth Strategy of Sun Pharma
- Optimize the operational cost
- Vertical integration of the operations
Profit Balance and investments for future
- Directing the future investments to differentiation of products
- Increasing the contribution of complex and specialty products
- Ensuring acquisitions of high yield return on investment
- Use acquisitions to bridge the gap of critical capability areas
- Focusing on payback timelines
- Focusing on product accessibility, market presence and technology
Creating sustainable revenue streams
- Speed to market
- Achieving differentiation by focusing on technically complex products
- Enhancing share of specialty business globally
- Ensuring global regulatory standards and sustainable compliance
- Focus on key markets to achieve critical mass
Diversified Revenue base of Sun Pharma
|Weatern Europe and Other Markets||11%|
|API & Others||5%|
|India Branded Formulations||31%|
US Business at a glance
- Sun Pharma is the 5th largest pharma company in the US Generics Market
- It has a wide basket of 566 ANDAs & 54 NDAs filed and 432 ANDAs & 48 NDAs approved across multiple therapies
- Sun Pharma stands as the largest generic dermatology company and amongst top 5 branded dermatology company in the US
- The company offers liquids, Creams, Ointments, Gels, Sprays, Injectable, Tablets, Capsules, Drug-Device combination
- It has a robust pipeline with 134 ANDAs & 6 NDAs pending FDA approval, including a combination of complex generics, FTF opportunities and pure generics
- Employs integrated manufacturer with flexibility for manufacturing onshore/ offshore
Key Milestone in US Business
|2018||Filed NDA for OTX-101 with USFDA|
|2018||Acceptance and approval for ILUMYATM (tildrakizumab) in the US|
|2018||Launched Generic Coreg CR® in the US|
|2018||Launched Odomzo in the US|
|2017||Launched BromSite – Sun Pharma’s first specialty ophthalmic product – in the US|
|2017||Acquired Odomzo – branded oncology product from Novartis|
|2017||Acquired Ocular Technologies – giving access to OTX-101, a product for treating dry eyes|
|2016||Acquired InSite vision to strengthen the specialty ophthalmic portfolio|
|2015||Expanded presence in the US with the addition of Ranbaxy’s US business|
|2014||Acquired Pharmalucence to get access to sterile injectables capability|
|2013||Acquired DUSA, marking entry into the specialty dermatology market|
|2013||Acquired URL’s generics business|
|2010||Acquired Taro Pharma and forayed into the generics dermatology market|
|1998 – 2010||Enhanced and strengthened the US business|
|1998||Entered into the US market by acquiring Caraco|
India Business at a glance
- Sun Pharma is ranked 1stwith 8.3% market share in India
- Market leader in the chronic segment
- Specializes in technically complex products and offers a complete therapy basket
- Growth driven by a basket of brands – low product concentration
- Strong positioning in the acute segment
- 27 brands in the country’s top 300 pharmaceutical brands
Other Pharma Companies in India
|Zydus + Biochem||4.1%|
|Alkem + Cachet + Indchemie||3.5%|
Key Financial Highlights of Sun Pharma
Summary of Profit & Loss (in Rs mn)
Summary of Balance Sheet (in Rs mn)
|Net Fixed Assets||149404||20%||157110||5%|
|Cash and Bank Balances||151408||15%||99290||-34%|
Key Concerns for Sun Pharma
The domestic formulations business of Sun Pharma is routed via Aditya Medisales Limited (AML), which became a related party in FY2018 due to shareholding consolidation; it was not a related party prior to that.
The company is in the process of discussing various options and is open to changing the distribution arrangement with AML if investor concerns remain.
2. SEBI Investigation
Sun Pharma faced a recent issue of a whistle blower case filed with SEBI. This issue coupled with earlier reported business challenges has led to sharp de-rating.
The lack of information on the whistleblower case alleging irregularities at the company and uncertainty related to the outcome of the reopening of insider trading case will continue to remain as a hangover on the stock.
3. Increase in Loans and Advances
The loans and advances given to employees in FY 2018 was Rs. 2,200 crore which the management has said to be given in a normal course of business at market rates. The management said that the loan was for a duration of two to two-and-a- half-years and had the potential to be reversed.
4. Other Key Risks
Delays in product launches or change in pharma policy or regulations in the U.S. can impact the company earnings estimates adversely.
Some of the mutual funds who hold Sun Pharma in their portfolio are:
1. Axis Long Term Equity
2. DSP Small Cap Fund
3. UTI Healthcare Fund
4. UTI Mid Cap – Direct
5. UTI Value Opportunities
Disclaimer: the views expressed here are of the author and do not reflect those of Groww.